Correlation Between Northland Power and Carnegie Clean
Can any of the company-specific risk be diversified away by investing in both Northland Power and Carnegie Clean at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Northland Power and Carnegie Clean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northland Power and Carnegie Clean Energy, you can compare the effects of market volatilities on Northland Power and Carnegie Clean and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Northland Power with a short position of Carnegie Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northland Power and Carnegie Clean.
Diversification Opportunities for Northland Power and Carnegie Clean
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Northland and Carnegie is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Northland Power and Carnegie Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carnegie Clean Energy and Northland Power is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Northland Power are associated (or correlated) with Carnegie Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carnegie Clean Energy has no effect on the direction of Northland Power i.e., Northland Power and Carnegie Clean go up and down completely randomly.
Pair Corralation between Northland Power and Carnegie Clean
Assuming the 90 days horizon Northland Power is expected to under-perform the Carnegie Clean. But the stock apears to be less risky and, when comparing its historical volatility, Northland Power is 1.23 times less risky than Carnegie Clean. The stock trades about -0.16 of its potential returns per unit of risk. The Carnegie Clean Energy is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 2.22 in Carnegie Clean Energy on September 13, 2024 and sell it today you would lose (0.12) from holding Carnegie Clean Energy or give up 5.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northland Power vs. Carnegie Clean Energy
Performance |
| Timeline |
| Northland Power |
| Carnegie Clean Energy |
Northland Power and Carnegie Clean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northland Power and Carnegie Clean
The main advantage of trading using opposite Northland Power and Carnegie Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northland Power position performs unexpectedly, Carnegie Clean can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Carnegie Clean will offset losses from the drop in Carnegie Clean's long position.| Northland Power vs. NORWEGIAN AIR SHUT | Northland Power vs. SCANDMEDICAL SOLDK 040 | Northland Power vs. MEDICAL FACILITIES NEW | Northland Power vs. Clearside Biomedical |
| Carnegie Clean vs. Superior Plus Corp | Carnegie Clean vs. SIVERS SEMICONDUCTORS AB | Carnegie Clean vs. Norsk Hydro ASA | Carnegie Clean vs. Reliance Steel Aluminum |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Bonds Directory module to find actively traded corporate debentures issued by US companies.
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